The Canadian Resource Economy; images and reality:

Presentation by

Prof. Dr. Alfred Hecht*Viessmann European Research Centre at Laurier

Waterloo, Ontario, Canada

Hochschule HofHof, Germany

November 27, 2008

*A hearty ‘thank you’ goes to the Dr. Hans Vießmann-Stiftung and the Fachhochschule Hof "Fördergesellschaft“

for their financial help in bearing the cost for this Canada Day

Abstarct• After Russia, Canada is, geographically speaking, the second

largest country of the world. Hence, it is not extraordinary that Canada ‘harvests’ many natural resources. In fact the development of the Canadian economy is often associated with Harold Innis’ Staple Growth Development Theory. This theory suggests that Canada’s economic development rests on the export of resources. It started with the catch and export of fish from the east coast, followed by furs, lumber, grains, forest products, minerals and recently, energy. As long as the population was relatively small and resources prices were high, development continued. However, in the last 50 years or so, the value of raw materials have contribute less and less to the final sales value of products. The result has been that 33 million Canadians can no longer live of the harvest and export of resources. Today, most Canadians work in the service sector of the economy, followed by the processing industry and lastly by the resource sector. Despite this the economic image of Canada abroad is still of a country that lives from the extraction and harvesting of its resources.

Outline of presentation

• Introduction to the country• – the geography of Canada• – the economic picture of Canada abroad

– Frankfurter Allgemeine Zeitung and the Financial Times (US)

• Canadian historic economic development (Staple Growth Theory of H. Innis) – fish – fur – lumber– grain – forest products– minerals– energy

• The modern economy of Canada – the composition of the Canadian GDP– composition of the Canadian labour force– the most important economic sectors – exports and imports – what about the future?

Canada

Basic facts of Canada

• almost 10 million square kilometres (28x that of Germany) • twice as large as Europe and 14 time as large as Texas• east-west width is 5,514 km and north-south 4,624 km• considerably wider then the Atlantic Ocean!!! • average population density is 3 per square kilometres • 8% the area consists of lakes and rivers • only 7% the land can be used for agriculture• has 33.3 million inhabitants, of which 80% live in urbanised areas!! • GDP per person in July 1, 2008 was 48,500 $CDN • Overall GDP was 1,616.228 Billion CDN$, July 1, 2008• In terms of US$ PPP Canada = $38,600, Germany = $34,100 (2007

est.) (source: CIA, The World Factbook)

The Corporate Image off Canada Abroad: Frankfurter Allgemeine Zeitung, and Financial Times, US

• The FZ (October 30, 2008) and the FT ( October 21, 2008) give daily information on a selection of firms trading on the Toronto stock exchange

• On the TSX (Toronto Stock Exchange) about 1300 firms are listed!!!

• The FZ (Germany) gives daily stock price information on only 49 of these firms. • Their sector breakdown is as follows:

– 23 Resources (47%)– 8 ITS (technologies) – 7 Processing/Manufacturing industry – 4 Services / wholesale trade – 5 Financial/Banks – 2 Transport companies

• The FT (US) gives daily stock price information on 38 firms. • Their sector breakdown is as follows:

– 14 Resources (37%)– 6 ITS (technologies) – 1 Processing/Manufacturing industry – 4 Services / wholesale trade – 10 Financial/Banks – 2 Transport companies

– The resources firms are over-represented!!!

Traditional Canadian Northern Image; the polar bearSource: http://scaa.usask.ca/gallery/northern/content?pg=ex12-3

Traditional Northern Canadian Scene: Elsmere IslandSource: http://biology.queensu.ca/~pearl/PNAS2005.htm

The old northern transport image; dog sledding http://blog.ratestogo.com/wp-content/uploads/2008/04/dog-sledding-sunset.jpg

Hudson’s Bay Company Store - Rankin Inlet, and the new form of transport in the North in the Winter, the skidoo

Sources: http://scaa.usask.ca/gallery/northern/content?pg=ex13-3

Newfoundland and Labrador Image;Iceberg floating past the shore

Source: http://away.com/travel_photo_gallery/atlantic_canada/index.html

Famous Atlantic Canada Images; Peggy’s Cove and the hated Seal Hunt

http://away.com/images/gallery/atlantic_canada/gallery01.jpg

and http://www.cbc.ca/news/background/sealhunt/gfx/titlephoto.jpg

Atlantic Canada: Peggy's Cove in the morning mist Source: http://www.atlanticcanada.worldweb.com/Photos/TownscapesVillages/10-3697.html

The Birch Bark Canoe; the workhorse of the Canadian fur trade

Source: http://www.birchbarkcanoe.net/images/furtradecanoemain150sm.jpg

Champlain, founder of Quebec ally of the nativesSources: http://www.sonofthesouth.net/revolutionary-war/explorers/samuel-de-champlain.jpg

Native Canadians and the fur trade:Source; http://images.encarta.msn.com/xrefmedia/sharemed/targets/images/pho/t058/T058882A.jpg

The Canadian beaver; main staple of the fur trade Source: http://ci.marysville.wa.us/PublicWorks/swm/docs/beaver_files/Beaver%20Pic.jpg

Canadian loon; summer inhabitant of Canada’s northern lakes, image on the Canadian dollar

Source:

http://animals.nationalgeographic.com/staticfiles/NGS/Shared/StaticFiles/animals/images/primary/common-loon.jpg

Canadian northern lights; image of remotenessSource: www.greenstone.ca

Niagara Falls; tourist destination, Summer and Winter (1911)Source: http://i12.photobucket.com/albums/a215/IleneEulich/NiagaraFalls3.jpg

and http://www.dvc.hu/best/niagara_falls.jpg

Indian Summer in Ontario, Maple Lake, 2008Source: A. Hecht

Maple Lake in the fall in Northern OntarioSource: A. Hecht

Our Cabin on Maple lakeSource: A. Hecht

Relaxing on Maple Lake in the Canadian ShieldSource; A. Hecht

Indian Summer: relaxing with a beer and having an interesting conversation with the granddaughter

Source: A. Hecht

Marshmallow feast in the evening by the open fireSource: A. Hecht

The present workhorse of Canada’s peripheries; the float planeSource: A. Hecht

Fishing in Canada’s North; Gogama, OntarioSource: A. Hecht

Wheat Fields in Manitoba and Saskatchewan; Source; http://www.ec.gc.ca/EnviroZine/images/Issue49/wheatfield_l.jpg and

http://wwwdelivery.superstock.com/WI/223/1647/PreviewComp/SuperStock_1647R-70644.jpg

Western Canada changing farm stead imageSource: http://www.iwantcanadaforgood.com/pic/homeimage-saskatchewan.jpg

First oil well In Western Canada: Today’s office towers in Calgary

Source: http://picasaweb.google.com/joella.bryant/WatertonLakesNationalParkAlbertaCanada08#5220271439020817938

Western Canada grizzly: Source; http://www.muchmormagazine.com/wordpress/wp-content/gallery/readers-pictures/grizzly-bear.jpg

Grizzly bears of Knight Inlet British Columbia:Source: http://www.freshtracks.ca/images/lrg/grizzly-man-wallpaper-3-1600.jpg

Western Canada wholesome image: The RockiesSource: http://upload.wikimedia.org/wikipedia/commons/d/d5/Moraine_lake.jpg

Historic Canadian city: Quebec CitySource: http://www.bonjourquebec.com/fileadmin/Image/decouvrez/experiences/villes/quebec/tvhd_130_g.jpg

The Canadian economic heart; TorontoSource: http://en.wikipedia.org/wiki/Toronto

The economic growth centre in the west; Calgary Source: http://en.wikipedia.org/wiki/Image:CalNight.jpg

Harold Innis’ Development TheorySource: constructed by A. Hecht

Relative ressource prices through timeSource: constructed by A. Hecht

The fishing staple• fish was the first export from Canada to Europe • Cod was first salted and then transported in casks. • Came mainly from the 'Grand Banks' of Newfoundland. • Later it first was dried on the mainland and exported to Europe • Salmon was and is the most important fish from the west coast • In 2004, the fish catch was valued at $ 2,212,274,000. Aquaculture

added another 30% to this value.• Canada’s fish catch presently ranks 17th in the world• Canada exported 2 times as much fish as it imports. • The fish catch is now highly restricted by the Federal government. • Almost all fishing villages have high unemployment rates both

on the east and west coast!!

Traditional image of the Canadian resource sector: Cod fishing on the Grand Banks off Newfoundland

Source: US, New England Textbook, 1867

The newest staple: Oil extraction on the Grand BanksSource: http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=A1SEC821443

The Fur Staple

• Main products are different furs - especially beaver

• From 1700 to 1850, furs were the most important export of Canada

• The Native Indians were part of this economy

• The demand for fur in Europe opened/explored the country

• The main carrier of furs was the canoe

• The current value of wild furs in Canada is less than 100 million $/year.

• World "Environmental" pressure holds the demand for furs low.

The trading post; meeting place of the fur seller and the merchant

Glorious image of the fur transporting voyageursSource: Shooting the Rapids, in a master canoe. Painting by Francis Ann

Source: http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=A1ARTA0008396

The lumber staple economy Source: USA, New England Textbook, 1867

The lumber and wood product staples

• Canada has 10% of the world forest area • 45% the country is wooded • only 56% has some commercial value • 12% is found in nature reserves • only 0.5% the useful acreage is clear-cut per year • natural forest fires consume yearly 1.2% of the total

forested area • Canada is the largest exporter of forest products (20%) • main products are paper (26%), soft wood (20%), Pulp

(15%)... • Total direct addition to the Canadian economy is 3% of

GDP per year.

The wheat staple – Craik, Saskatchewan

The Canadian agricultural staples:Source: Agriculture and Agri-Food Canada, see

http://www.agr.gc.ca/index_e.php

• After the opening of the Prairies in 1885, Canada became a large grain exporter

• Canadian agricultural acreage is twice as large as all of Germany

• 98% of the economy units are family business

• The average size is somewhat over 244 ha

• Main products are: Grains, cattle, milk, pigs, vegetable and fruit products • The economy is geographically concentrated in the west, in southern Ontario and

Quebec, and in southern British Columbia

• Less than 3% of the Canadian workers make a direct living in this industry

• The contribution to the Canadian GDP in 2007 was only 2.3%

Canada’s mineral staples:Source: Natural resources Canada,” Minerals” see,

http://www.nrcan-rncan.gc.ca/com/subsuj/minmin-eng.php

• Over 60 different minerals are mined in Canada • 80% of the production is exported

• of large importance are the following; – uranium (1 place in the world - 31.1%)– zinc (1 place in the world - 16.1%) – potash (1 place in the world - 37.4%) – nickel (2 places in the world - 17.9%) – asbestos (2 would place in the world - 22.6%) – sulphur (2 places in the world - 21.0%) – Cadmium (2 places in the world - 12.2%) – copper (3 places in the world - 7.2%)

– gold (4 places in the world - 7.1%) – In 5 place are aluminums, cobalt, plaster, lead, molybdenum, Palatinum,

salt, silver are and titanium-concentrate – recycling may dampen demand of these minerals in the future

Canada’s energy staple:Source: Natural Resources Canada, “Energy”, see

http://www.nrcan-rncan.gc.ca/com/eneene/index-eng.php

• Main energy sources are oil, natural gas, coal, water power and nuclear power.

• 65% of the oil comes from traditional oil wells (65%) and 35% from the tar sands.

• Canada is the 12-largest oil producing country of the world. • The tar sand oil reserves are almost as large as reserves of south

Arabia (180 trillions against 260 trillions barrels). Http://www.energybulletin.net/7331.html

• it is the 3-largest natural gas producer of the world. • It is in 9th place in the production of oil (2005 - 3,110,000 Bbl/day). • It is in 9th place in the production of coal. • Alberta has 80% of the oils and natural gas production. • Canada exports energy in the west and imports it in the East. • Canadian energy consumption per person is almost the highest in

the world.

Shehtah Drilling Rig: Mackenzie Delta, Northwest Territories.

Tar Sands excavation 1933

2008 Canadian GDP industrial makeupSource: Statistics Canada; see

http://www40.statcan.ca/l01/cst01/gdps04a.htm accessed Oct. 6, 2008

July 2008 %

in $ (000,000)

All industries 1238091 100

Goods-producing industries 369565 30.01

Agriculture, forestry, fishing and hunting 25809 2.10

Mining and oil and gas extraction 56843 4.62

Manufacturing 181482 14.74

Construction industries 74342 6.04

Utilities 31089 2.52

Services-producing industries 869617 70.61

Canadian employment by industrial sectors, 2007

Source: Statistics Canada, Employment by Industry, see

http://www40.statcan.ca/l01/cst01/econ40.htm?sdi=employment%20industries

 in '000 %

All industries16,866.40 100

Goods-producing sector3,993.00 23.67

Agriculture337.20 2.00

Forestry, fishing, mining, oil and gas339.30 2.01

Utilities138.00 0.82

Construction1,133.50 6.72

Manufacturing2,044.90 12.12

Services-producing sector12,873.50 76.33

1960 to 2000, Canadian comodety export trend

Canadian commodity exports, 2007Source: Statistics Canada; “Exports of goods on a balance-of-payments basis, by product” see

http://www40.statcan.ca/l01/cst01/gblec04.htm

   2007 %

  in 000000

Exports 463,051 100

Agricultural and fishing products 34,370 7.4

Wheat 4,637 13.5

Other agricultural and fishing products 29,733 86.5

Energy products 91,647 19.8

Crude petroleum 40,998 44.7

Natural gas 28,378 31.0

Other energy products 22,272 24.3

Forestry products 29,263 6.3

Lumber and sawmill products 12,613 43.1

Wood pulp and other wood products 6,685 22.8

Newsprint and other paper and paperboard products 9,965 34.1

Industrial goods and materials 104,421 22.6

Machinery and equipment 93,428 20.2

Automotive products 77,304 16.7

Other consumer goods 18,737 4.0

Special transactions trade 8,176 1.8

Unallocated adjustments 5,704 1.2

Summary

• Seen from an export perspective, raw products are still very importance to Canada (33,9%).

• But the resources industry produces few direct jobs and contributes little directly to Canadian GDP. In a sense the Canadian Economy has become developed.

• Most Canadians live in cities and work in services and goods producing industries.

• Whether this Canadian reality will be reflected in the outside image of Canada in the near future is questionable. It is hard to change comfortable old images.

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